BUSINESS LIVE: Inflation slows to 3.4%; Prudential profits jump; Johnson Matthew sells unit for $700m

The enormous discount to net asset value on FTSE 250-listed HarbourVest Global Private Equity (HVPE) shares could finally narrow after an overhaul of shareholder payouts.

The investment trust, which hosts a portfolio of private equity funds managed by HarbourVest, has traded at a discount to NAV hovering around or below 40 per cent since the start of the year, having traded closer to 50 per cent for much of 2023, Morningstar data shows.

The stock market has a fight on its hands to win a £15billion listing for Unilever’s ice-cream business.

The consumer goods giant yesterday announced a radical shake-up that will see it spin off the unit in a move that will cost 7,500 jobs worldwide.

Shares in Rolls-Royce closed at a record high in the latest sign of its remarkable turnaround.

The FTSE 100 jet engine maker is one of Britain’s biggest defence companies and has gone from strength to strength following a recovery in air travel.

Lindsay James, investment strategist at Quilter Investors:

‘With the majority of divisions seeing reduced levels of annual inflation in February, with areas such as food and communication seeing notable falls, the data paints a picture of broad disinflation across the goods economy, with the services sector seeing a much more muted drop.

‘The plunge in energy bills anticipated in April could see an even greater fall in headline figures, aligning with the Office for Budget Responsibility’s expectation that inflation will average out at 2.2% in 2024.

‘However, economist forecasts for the medium term have considerable variance, highlighting risks that are still present around energy security, supply chain resilience and structural labour shortages.

‘Wage growth has been a significant driver of inflation in the service economy for some months, and recent data showed this is now slowing a little. However, it will likely make the Bank’s 2% target more difficult to achieve.

‘This looks likely to remain a strong inflationary driver while there is an ongoing mismatch in the labour supply available and the level of demand on offer, with recent business surveys flagging that this pressure remains elevated and a cost they are passing through to customers in the form of price rises.

‘Similarly, ongoing disruption to international shipping continues to put pressure on supply chains amidst higher freight rates and longer lead times.’

Japan’s central bank raised its benchmark borrowing rate for the first time in 17 years – ending the global experiment with negative interest rates.

The increase ends eight years of sub-zero rates as the Bank of Japan aimed to stimulate the moribund economy.

It is the last central bank to end negative rates, a policy that has also been pursued by the European Central Bank, as well as counterparts in Switzerland, Sweden and Denmark.

Jeremy Batstone-Carr, European strategist at Raymond James Investment Services:

‘UK inflationary pressures have begun sliding towards the Bank of England’s 2% medium-term target. Though prices are still rising, this is now happening at a rate more consistent with typical levels for February.

‘Today’s data confirms that food and restaurant price pressures have eased, and reflects the additional respite offered by the “Great British Rail Sale” at the end of January.

‘Underlying price pressures are also easing gradually and should continue to do so over spring, providing additional encouragement ahead of the Bank’s base rate decision tomorrow.

‘The Bank’s rate-setters will likely want more evidence of falling inflationary pressures before cutting interest rates. But, as it stands, there is nothing to dissuade the Monetary Policy Committee from cutting the base rate in the early summer.’

George Lagarias, chief economist at Mazars:

‘Inflation fell more than expected, across most categories. An economy in technical recession is more than balancing out building price pressures from external supply chains.

‘While a pickup in producer output prices may give Andrew Bailey some pause, we believe that the overall figure brings the first rate cut closer. It is becoming obvious that the UK, much like Europe, is following a much shallower path in terms of growth and inflation than the US.

‘The Bank of England, like the ECB, may not have the luxury to wait for the Fed to make the first move in the rate cut cycle, but rather choose to lead this dance themselves.’

Consumer price inflation slowed to a weaker-than-forecast 3.4 per cent in February, down from 4 per cent in the previous month and marking its lowest rate since September 2021, fresh data from the Office for National Statistics shows.